CBHB: Earnings Exceed Expectations Amidst Strong Operational Efficiency

Performance Review

A recent investment bank research report indicates a significant financial outperformance, with core net profit for the fourth quarter of fiscal year 2025 (4QFY25) soaring by 92.7% year-on-year to RM20.6 million. This strong quarterly showing pushed cumulative full-year FY25 earnings well above both the investment bank’s internal projections (114%) and market consensus (139%).

The robust performance was primarily driven by strategic variation orders from ongoing projects and notable improvements in project margins as completion neared. A key factor contributing to the earnings beat was lower-than-expected operating costs. This efficiency gain stemmed from proactive revisions to budgeted project costs, resulting in actual expenditures falling below initial estimates. Consequently, the core net margin expanded significantly by 9.8 percentage points year-on-year to 22.6% in 4QFY25. Quarterly revenue also saw a healthy increase of 8.7% year-on-year, reaching RM91.2 million, bolstered by newly secured Mechanical & Electrical (M&E) systems projects and existing variation orders. The M&E systems segment remains the dominant revenue contributor, accounting for over 99% of total revenue.

Future Outlook & Recommendation

Looking ahead, the outlook remains highly positive, underpinned by a robust tender pipeline and favourable sector tailwinds, particularly in the burgeoning data centre industry. The company’s outstanding order book stands at RM591.8 million, with over 90% of this figure being data centre-related, providing clear earnings visibility for the next one to two years. Furthermore, its tender book, valued at RM830 million, is predominantly focused on data centre projects (approximately 80%). The report highlights significant land acquisitions by major hyperscalers in key Malaysian states and complementary public initiatives, affirming Malaysia’s long-term commitment to its data centre ecosystem. The company is strategically positioned to capitalize on this ongoing expansion.

Given the enhanced earnings visibility, the investment bank has raised its FY26-27F earnings forecasts by an average of 4.8%. It maintains an Outperform rating on the stock, with a target price raised to RM0.65, based on approximately 17 times its FY26F earnings per share. Additionally, a final dividend of 0.27 sen per share was declared.